Champagne Taking an Elite Turn

By STEVEN GREENHOUSE, Special to The New York Times

Published: October 18, 1990

EPERNAY, France—
Nearly a decade ago, the centuries-old Champagne houses of France, beset by sluggish sales, decided that their business needed a bit more of the hustle and flash of modern marketing. Slick promotional campaigns featuring long-legged blondes and golden bubbles were created to lift Champagne sales. No longer, Champagne executives decreed, would their prestigious drink be restricted to what the French called the happy few.

The marketing drive succeeded beyond all expectations. Worldwide sales of Champagne, which climbed to a record 250 million bottles last year, are up 75 percent since 1982, and exports have doubled.

'Democratization' Disappoints

Today, with demand far exceeding supply, the genteel Champagne makers are responding with higher prices and hauteur. They are planning to raise prices sharply over the next few months. People who now pay $24 for a bottle of premium Champagne like Moet & Chandon, Taittinger or Bollinger may soon have to spend $30 or more for a bottle.

Such increases will, of course, provide greater profits to the Champagne makers. But they are not putting it that way. They say they are in the uncomfortable position of having to ration shipments and of being badgered by pushy liquor-store operators who want to keep the bubbly flowing to all the newlyweds and party-givers who expect it. ''Democratization can sometimes go too far,'' said Christian Bizot, chairman of the Bollinger Champagne house.

To be sure, the houses are also facing higher costs themselves. They agreed this year to pay at least 20 percent more for grapes after a near-rebellion among growers, who thought they were receiving too low a price for their grapes. More and more growers started making sparkling wine themselves because they found it more profitable than selling the grapes to the big houses, which began worrying that they would face a drastic shortage of grapes.

Many people wonder why Champagne houses do not increase production to meet the booming demand. The reason is that the French Government has limited the area where grapes for Champagne can be grown, and it is in no rush to increase the 86,500 designated acres in the Epernay-Rheims area, 90 miles east of Paris. In an international agreement that has been signed by many countries but not the United States, only sparkling wine made in that region can be called Champagne.

''Champagne is a product of the earth, and we're limited by that,'' said Andre Enders, director of the Comite Interprofessionelle du Vin de Champagne, a trade association.

Aiming to Reduce Demand

By pushing prices skyward, the Champagne houses hope to reduce demand so that it falls into balance with supply.

''Our sales have gone up much too fast,'' said Jean-Michel Ducellier, president of the Ayala Champagne house and chairman of the Association of Champagne Producers. ''We have kept our prices too low.''

While $40-a-bottle Champagne will not shake the world like $40-a-barrel oil, it is a reminder that some of the dearest things in life are growing dearer, especially in the United States, with its ever-weaker dollar. What is more, Washington's plans to increase taxes on spirits will make Champagne even pricier.

''French Champagne prices are spiraling to the heavens, and I don't know how many people can keep up with it,'' said Michael Aaron, chairman of Sherry-Lehmann, the New York wine and spirits retailer.

Less Expensive Alternatives

Many people are expected to turn to respectable, less expensive sparking wines from other areas, including California. This shift could cause France's Champagne houses to think twice about raising prices, but at the moment they seem preoccupied with reducing demand.

Champagne prices are expected to rise by 15 percent in French franc terms, but as the dollar falls to its lowest levels ever against European currencies, Champagne prices could rise by substantially more than that in the United States.

''Americans became spoiled because they got used to buying Champagne at $12 and $15 a bottle when the dollar was unusually strong a few years ago,'' said Mr. Bizot of Bollinger. ''That was an unnaturally low price.''

Decline in U.S. Sales

By contrast to the worldwide growth, Champagne sales in the United States have declined in the last two years, reflecting both growing anti-alcohol sentiments and the weaker dollar. The higher prices are likely to push United States sales down further.

The five largest houses account for nearly half the Champagne produced, according to the trade publication Impact International. Moet & Chandon is the largest, with about 22 percent of the world market. Veuve Cliquot produces about 8.5 percent, G. H. Mumm about 8.2 percent, Pommery 4.8 percent and Lanson 4.7 percent.

The biggest sales declines, some officials say, could come in vintage Champagnes, like Moet's Dom Perignon, which often costs more than $80 a bottle. Yves Benard, the chairman of Moet & Chandon, said ''the golden boys of the financial world'' are no longer throwing around money the way they used to, buying $100 bottles of Champagne.

'A Lot of Competition' Overlooked

More than one industry official predicted the jump in prices could cause many drinkers to defect to less expensive sparkling wines from California, Spain, Australia and Brazil.

''What French Champagne growers fail to see is they have a lot of competition from around the world,'' said Mr. Aaron of Sherry-Lehmann.

But denizens of the Champagne region pooh-pooh the idea of competition. They make the one and only Champagne, they say, and the pretenders just do not measure up. As prices soar, that attitude has become the centerpiece of their marketing campaign. They also hope to use a higher percentage of grapes to make high-priced, more profitable premium Champagnes, often destined for export.

'Not a Race for Volume'

''Our calling is to be the best,'' said Marc Brugnon, president of the Champagne grape growers association. ''Ours is not a race for volume. We make a luxury product.'' Even so, many executives feel giddy about the stratospheric Champagne prices. While they would like a slight drop in demand, they fear that sharp price increases could cause sales to plunge.

Such a decline, in turn, could cause Champagne houses to slash their prices in a year or two. The proud barons of Champagne dread this prospect because it would sabotage the elite, above-the-fray image they have meticulously built over the decades.

Photo: Jean-Michel Ducellier, the president of the Ayala Champagne house, is also the chairman of the Association of Champagne Producers. (Steven Greenhouse/The New York Times) (pg. D1); Graph: Champagne sales from '81 to '89 (Source: Comite Interprofessionnel du vin de Champagne) (pg. D5)